Single Touch Payroll is required for all Australian businesses

Feb 27, 2019
Business
6
minute read

Single Touch Payroll (STP) was introduced on 1 July 2018 for all businesses with 20 or more employees. The laws to extend single touch payroll reporting to employers with less than 20 employees has also passed the Senate and is now law.

STP has rolled out in stages to smaller businesses with less than 20 employees, this began as at 1 July 2019.

Whilst there are still elements of the STP rollout for smaller businesses that need to be defined by the ATO, what is clear is that business owners need to be aware of what STP is, and what it will mean for the future.

What is single touch payroll?

STP requires business owners to have payroll transaction data transferred to the ATO each time employees are paid. This means businesses are required to use a software solution, like Xero, that will transmit the data to and from the ATO.

Single touch payroll software provider

The single touch payroll software provider you choose must report the following items to the ATO each pay cycle:

  • each employee's name and tax file number (TFN)
  • gross amount paid
  • tax withheld on the gross
  • ordinary time earnings for the period, and
  • any superannuation guarantee obligations.

If the accounting system you are using is automated with reports that can provide the information listed above for every pay cycle, all you need to do is confirm that the product is STP compliant. If your business is using Xero, then rest assured – Xero is STP compliant. However, if your system is still manual, you need to review your internal processes.

Why is the ATO introducing single touch payroll?

STP allows the ATO to report accurate PAYG tax withheld information to employers each month or quarter, which they are required to pay in their activity statements. Also, each quarter the ATO will report details regarding superannuation obligations employers will need to pay either to the ATO clearing house or an independent provider.

As part of the new regime, the reports and liabilities owing will be available in real time. This means businesses will be able to make payments towards PAYG tax withheld and superannuation contributions in the pay cycle before the due date.

Do I have to use single touch payroll?

The STP regime was mandatory for employers of more than 20 staff from 1 July 2018, and applied to all employers as at 1 July 2019.

Updates from the ATO regarding single touch payroll

  • Micro employers (1-4 employees) will be able to report quarterly for the first two years.
  • Small employers (5-19 employees) were given a short grace period of until 30 September 2019 to be submitting live pay data.
  • Deferrals and exceptions are available for employers experiencing hardship, or in areas with intermittent or no internet connection. Discuss your circumstances with a business advisor.
  • To avoid any fines or penalties from the ATO, become STP as soon as possible. In the event that you need a solution or just want your system reviewed, Here Business & Wealth can help and advise on a suitable cost-effective solution for your business.

Four steps to get STP ready...

1. Find a single touch payroll software provider

If you are unsure if you're software provider is STP compliant, chat to us. We'll review your business accounting and payroll systems.

2. SPT reporting start dates

If on 1 April 2018 you had 20 or more employees, STP began as at 1 July 2018. For businesses with 19 or less employees, the deadline for mandatory reporting was 1 July 2019.

3. Make sure your payroll team is aware of STP and your employee data up to date

Don’t start using STP with inaccurate employee information – ask your employees to confirm all the personal details you hold on file for them.

4. Have questions? Check out our FAQs below

And if we haven't answered your question, get in touch - we're happy to talk you through your STP obligations.

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FAQs

What does single touch payroll mean for me as an employer?

Digital connectivity is becoming a necessary part of running a business in Australia. Instead of typically reporting payment once at the end of a financial year, employers are now be required to send information to the ATO with every pay run.

Do I still need to lodge a business activity statement?

Yes, businesses still need to submit a BAS. If you're on Xero and have set up the W1 and W2 values in Xero Payroll, they will continue to show up in BAS/ IAS as usual.

Do FBT, ETP and RESC need to be reported using single touch payroll?

Yes. ETP (employment termination payments) and RESC (reportable employer super contributions) are reported when processing and filing pay runs. And FBT (fringe benefits tax) is reported when you finalise STP.

Do I need to issue annual payment summaries to employees anymore?

Once you start STP, you won’t need to produce payment summaries or a payment summary annual report. Instead, there’s a simple end-of-year process for finalising STP. This process just sends a confirmation that you have fully reported for the financial year and for each of your employees.

What happens if I make a mistake?

If you spot a mistake in a pay run that you’ve filed with STP, you can still make a correction. You have a few options here depending on the mistake you’ve found. You can either:
- revert the pay run, make your required changes, post and file, or
- complete an unscheduled pay run and fix the mistake in time for your next pay run.

Will I need to file part-year information if I don’t start STP at the beginning of the financial year?

No, there’ll be no need for that. With STP, your accounting software files the financial year to date payroll information, which means that you only have to start filing information from when you opted into STP.

How do I find out if I'm STP compliant?

Chat to us. We'll review your software and payroll processes, advise on the best solution, and if needed we can assist with the roll-out. If you are not client but would like some advice on how to become STP compliant, chat to us. We are happy to help you in any way we can.

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